10 Best Mutual Funds for Long Term Investment in 2018

Pijush Biswas

08 Mar 2018

Mutual Funds are a great investment option for people who wish to grow their money over a period of time. Whether investors are looking for capital gains or seeking regular income, they can choose to invest in a wide range of mutual funds.

From the long-term perspective, it is advisable to create a portfolio of mutual funds using a top-down approach, which includes first arriving at an optimal asset allocation based on one’s risk tolerance, and then selecting funds to match one’s risk-reward investment plan.

The biggest advantage of investing through a mutual fund is that it gives small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult to create with a small amount of capital.

Many new investors are flocking to mutual funds these days. The ever ballooning Assets Under Management (AUM) of mutual funds reflects the trend. However, many investors find it difficult to put together a few schemes that would help them to meet their various long-term financial goals. So, let’s look into the 10 best mutual funds for long-term investment planning.

Short-term investments are usually those that need to be liquidated within a 3 year period, whereas, any investment held for over 5 years is considered as a long-term investment.

Small and Mid-cap funds are ideal for investing for longer durations in a mutual fund.

Investment in mid cap funds which carry higher risk, than large cap funds, but can also be very rewarding in the long term. The risk quotient rises significantly in small cap funds, but so do the returns.

The top small cap funds have generated over 40% annualized returns in the past one years.

Benefits of Staying Invested in Mutual Funds for Long Term

The flexibility provided by mutual funds as an investment option is near unparallel as you not only get the option of making solid investments for both the short term as well as the long term.

But invest for long term , an advice routinely given by many mutual fund distributors and investment advisors. This is especially true in case of equity mutual funds.

The equity mutual fund investments provide return fluctuations in the short run, but they are the ones which tend to generate solid capital growth in the long run period.

Time plays an essential role in making the best choice of investment strategy. When the money is invested for a longer duration, the market faces various ups and downs leading to fluctuations in the returns, but as per the law of averages the overall returns are managed and evened out to create long term wealth.

Also, in the long run, the fund managers get adequate time to make adjustments in the portfolio in order to bring the best returns while grabbing the greatest opportunity. As the funds are not redeemed shortly, they get enough time to earn wealth as desired.

And lastly, staying invested in a mutual fund for a longer period of time has been beneficial to the investor as one can get the benefit from the power of compounding. Compounding, of course, works best when one stays invested over a longer period of time.

Conclusion

Small and mid cap funds are highly risky funds and are best suitable for investment for longer duration. They yield high return on investment as compared to other equity oriented mutual funds.

For the first time investors who want to get exposure to the Indian equity markets, it would be advisable to invest through a Systematic Investment Plan (SIP) rather than making lump sum investments.

SIP investment would ensure that even if the market corrects in the short term, the effect of rupee cost averaging will reduce the overall effect of the markets. In an SIP instead of a lump sum, the investment is done regularly on specific intervals.

It is one of the best ways to invest and tested method of minimizing risk and yet enjoying good returns, by regular, periodic investment, over a long horizon.

Things to Remember

Don’t just run for returns from investment for investing in mutual funds. There are a lot of factors you should look into before selecting a fund which will match your investment goals.

Following the 3 things you should always remember before investing in Mutual Funds :

Higher rates : don’t blindly invest in the fund with the highest returns. Invest based on the duration you want to invest for.

Every person’s financial condition is different. Evaluate the funds you invest in yourself – don’t invest in a fund because of its popularity.

Review your investment from time to time but not too often. Once a few weeks is good enough.

To ensure that the fund is in good hands, choose a fund house having fund manager with good amount of experience managing small/mid cap funds and associated with these funds for some good numbers of years.

RESOURCES

Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.

Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.

Groww is an investing platform where users can find the best mutual funds to invest in and can invest their money without any hassles. Groww provides objective evaluation of mutual funds and does not advice or recommend any mutual fund or portfolios. Investor shall invest with their own descretion. Groww does not guarantee any returns and safety of capital.

Groww helps investors in the following way

· By providing objective evaluation of products available on Groww

· By bringing up red flags, if any, involved in the products. However Groww does not guarantee to bring out all red flags

· By being transparent about fees and charges involved in investing in a product

· By clearly representing the risk associated with buying a product

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All transactions on Groww are safe and secure. Users can invest through SIP or Lumpsum using Netbanking through all supported banks. It uses BSE Star MF (with Member code 11724) as transaction platform.

MUTUAL FUNDS SAHI HAI

Mutual fund investments are very popular with individual investors because of the benefits they provide. Among the many advantages, the most important factors that drive investors to mutual funds are that Investors can

Portfolio is collection of mutual funds designed to meet your investment goals. Investing in mutual fund portfolios helps you in diversifying your investments and reduces the risk. Portfolios also help you in assigning an investment goals and make it easy for you to save for and achieve your goals. You can create a portfolio yourself or ask an expert to build it for you.

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